The Transfer and Licensing of Know-How and Intellectual Property: Understanding the Multinational Enterprise in the Modern World

Innovation and Economic Growth and Intellectual Property

Article Snapshot


David Teece


World Scientific Publishing Co., 2008


This book is a collection of David Teece's published articles dealing with technology innovation and transfer.

Policy Relevance

The history and development of technological transfers, both international and domestic, affects antitrust regulation as well as the creation of incentives for innovators.

Main Points

  • Modern economic growth is highly dependent on the stock of technological knowledge possessed by society. Because innovation occurs across the globe, the transfer of technology is an essential part of technological development.
  • There is substantial cost associated with international technology transfers, a cost which increases where the receiving party does not fully understand the innovation. However, the cost of transferring technological innovations internationally decreases with each subsequent transfer of similar technology. This is particularly true in the chemical industry.
  • In addition to the transfer of technology, it is also necessary for innovators to be rewarded for their work; such rewards act as an incentive for future innovation. A series of strategies have been developed to help innovators profit from technological innovation, the principles of which are largely dependent on both the industry and the innovation at issue.
  • Compensation for innovation is further complicated in cases where the associated intellectual property is infringed upon, or found to be invalid. The value of these innovations is largely dependent on negotiations that occur during litigation, and, as such, litigation settlements strongly affect the social incentive for innovation.
  • After incentives for innovation have been created and maintained, corporate attention often turns to the complexity of organizing research and development (R&D). How companies interact in order to progress R&D strongly affects both their success and the potential value of the resulting innovation.
  • International R&D cooperatives face additional hurdles including possible violations of antitrust laws that would not be faced by firms cooperating within the same country. Yet, international cooperation is efficiency-enhancing, and antitrust regulation should be flexible enough to allow their use.


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